Showing posts with label linked barabasi albert laszlo scale free network poverty wealth distribution economics natural selection poor. Show all posts
Showing posts with label linked barabasi albert laszlo scale free network poverty wealth distribution economics natural selection poor. Show all posts

Wednesday, July 27, 2011

Solving and Understanding Poverty

I've just read Chapter Six from Albert-László Barabási's Linked. It's about the 80/20 rule, and it says: "Pareto's result means that 80% of the world's wealth is owned by 20% of the population", yes we can accept that, you can check this here: http://www.zerohedge.com/article/detailed-look-global-wealth-distribution

What is surprising, that he writes a couple of pages earlier that: "These nodes that have a high number of connections (i.e. people with a lot of money) are responsible for the security of the network against faults and attacks." This is a well known characteristic of a scale-free network, because even with a large fraction of nodes randomly removed that network stays well connected compared to a randomly connected network, which can become separated after only a small fraction of nodes removed. How does this translate to humanity, societies and the welfare of people?

Humanity requires rich people for stability. Poor people cannot commit philantropy. The scale-free network is similar to phase transitions in materials - scale-freeness is orderedness. If a society is unordered and unorganized, it will be a random network, and thus have a Gaussian distribution of wealth - which means most of the people will have some wealth, but very few will be poor or rich. This is similar to socialist and communist economic goals: equality of wealth. Why is this bad and why should we NOT try to "fix" this?

Partly because in case of an aforementioned random removal of nodes (ex.: a flu epidemic or terrorist attack causes people dying), which can destroy a random network of socialist economy, but not a scale-free network of capitalist-laissez-faire economy.

An other case would be when a selected part of the wealth distribution collectively commits a mistake. For example: if everyone would earn a general middle-low income then they can afford to buy or do the same things. They would all choose the same thing, even if it is a bad investment. In a scale-free unequal society the more risk people take when sacrificing a big sum of the society's resources by buying something expensive the less people there are. In a socialist society a lot of risky invetments could be made by a LOT of people instead of very few people.

My two arguements are complementary. The first one praises the few rich, the second one the many poor. Either way - nature and natural selection selects the safest strategy for keeping humanity alive.